2013 (10) TMI 1188 - AT - Central Excise

Valuation - After sales service - Service Discount in lieu of the Guarantee - Held that - The issue of including free service/ after sales services rendered by the dealers to assessable value is no more res-integra, when there is no after sales flow of consideration from the buyers of the goods to the manufacturer Following Tata Motors Limited vs. UOI 2012 (9) TMI 244 - BOMBAY HIGH COURT - there is no evidence on records that any of the after sales money consideration has flown back from the ultimate buyer of the goods to the manufacturer - appeal filed by the appellant is allowed by setting aside the Order Decided in favour of Assessee.

Summary

Issues:
1. Whether a 2% service discount given by the appellant to its dealers during the guarantee period should be added to the assessable value as per Rule -6 of the Central Excise Valuation Rules, 2001/2002.

Analysis:
The case involved an appeal by M/s. Unnati Pumps Pvt. Limited against the Order-in-Original passed by the Assistant Commissioner, Central Excise & Customs, Division-II Ahmedabad, which was upheld by the first appellate authority. The issue was whether the 2% service discount provided to dealers by the appellant should be considered as additional consideration flowing from buyers to the appellant and added to the assessable value. The first appellate authority ruled in favor of including the discount in the assessable value, leading to the appeal to the CESTAT.

In the initial round of litigation, the matter was remanded by the CESTAT to the first appellate authority for a fresh decision following the principles of natural justice and considering relevant precedents. Despite this, the first appellate authority maintained its decision against the appellant, prompting the present appeal before the CESTAT.

During the hearing, the appellant's advocate cited a judgment by the CESTAT, Delhi in a similar case, emphasizing the relevance of including free services in the assessable value when there is no flow of consideration from buyers to the manufacturer. The respondent's representative reiterated the stance taken by the first appellate authority.

After careful consideration of arguments and case laws, the CESTAT observed that based on the legal principles established by the Hon'ble High Court of Bombay in a specific case, the appellant's situation aligned with the precedent as there was no evidence of after-sales consideration flowing back to the manufacturer from the buyers. Consequently, the CESTAT allowed the appeal, overturning the impugned Order-in-Appeal dated 29.09.2006/11.10.2006.

The judgment relied on legal precedents, principles of natural justice, and the interpretation of relevant provisions to determine the inclusion of the service discount in the assessable value, ultimately ruling in favor of the appellant based on the absence of after-sales consideration flow to the manufacturer.